As the US fintech giant gears up to take on the UK market, AltFi caught up with the firm's co-founder Nichole Mustard to discuss Brexit, Open Banking and credit scoring.
As one of the largest US fintechs Credit Karma’s planned expansion into the UK market should come as no surprise but for the fact that many of the largest financial disruptors have tended to stick to their home markets. Could this trend to be starting to shift? Revolut and Funding Circle both have expanded globally and other challengers such as Oaknorth have expressed ambitions further a field.
Credit Karma, valued at $4bn, operates in the credit scoring market but sees itself as a ‘financial health’ company, a term that is yet to be applied in any material way here in the UK but is popular in the US. LendingClub, for example, even recently rebranded in such terms. Credit Karma is curently in the process of acquiring Noddle (a similar but much smaller UK firm) as it looks to take on the likes of Clearscore here in the UK. Credit Karma hasn't bought Noddle yet just to be clear but has agreed to buy it and is waiting for approval from the regulator.
Founded more than 10 years ago, the San Francisco-based company has 85 million members in North America (Noddle has 4 million). It currently provides users with identity monitoring, DIY tax filing and other financial health stats for free but have many other features in the pipeline too.
AltFi recently caught up with Nichole Mustard (pictured right), co-founder of Credit Karma and its chief revenue officer, who will lead the UK launch. She says the firm will take on the likes of Clear Score but will look to a launch a raft of functions new for UK users.
“Credit scoring is a reason to come to Credit Karma but not the only reason.In the US, people can see how much their car is worth or cross-shop auto insurance, understand your home buying power, taxes for free,” she said.
“When we looked at the UK market it had so many similarities to what we saw in the US. Consumers who access credit regularly, use it wisely. We saw some people doing similar things to what we did here in the US but no-one with the scale and investment and the passion behind it,” she added.
Of course the timing for the move means much political and business energy at least is being taken up with the uncertainty of Brexit in the UK. Did this put off or Credit Karma? Or perhaps even offer an attractive opportunity for a firm paying for sterling assets in dollars.
“I'm not sure we got much of a discount. It [Brexit uncertainty] was not so much of an influence for us, we do worry about the population side but the banks aren't going to change. The financial ecosystem seems to still hold with or without Brexit,” Mustard said.
As part of the Noddle acquisition, the firm is onboarded 35 employees and is looking to double that in its first year, Mustard added.
“We already have a large platform but Noddle still has a lot of services that are paid so one of the first things we'll be looking to do is to make those services free. At Credit Karma our mission is all things are free. No credit cards are needed. We'll be investing in the technology and the relationship with the banks.”
The firm, Mustard says, will be looking to partner with both large banks and digital disruptors and adds that they will build their own tech to enable partners to use their services.
“There is a layer that drives approval probability but the technology platform hasn't been invested in in a while.”
Looking further afield, Mustard also noted that the UK's open banking regime and first mover advantage could be an interesting avenue for it to build out products into.
“Open banking becomes interesting if you have a centralised place where you put all your deposits. You don’t have to track them, we can track them for you."